There is no direct correlation between most on-chain metrics and Bitcoin's price action. But on-chain metrics are a good market sentiment tool. And since market moves are eventually driven by what investors are thinking, on-chain data does provide valuable insights.
The small fish are the addresses that control only a small number of coins. They are either part of entities that control much more coins in total or small time holders.
The typical behaviour of the small time holders is to always stack more sats. Bitcoin is pumping, stack more sats. Bitcoin is dumping, stack more sats. Bitcoin is cosplaying as a stable coin, stack more sats.
So what does it mean when those small fish stop stacking sats?
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Where are the small fish?
Bitcoin is open source, the blockchain is public, the network is permissionless. So there aren’t really insiders the same way there are insiders owning stocks of a public company.
But the open nature of the blockchain allows you to track which addresses are accumulating and which addresses are distributing coins. Taken in aggregate this can be used as a way of gaiging the sentiment that’s driving Bitcoin’s movements at the most fundamental level.
This is what we do every month in this report and that’s the closest you’ll get from understanding what the Bitcoin insiders are doing.
The takeaway
We are witnessing a pattern in the accumulation trend that is not very common. The three smallest cohorts of addresses are stacking sats at slower pace, and in the shorter time frame are actually distributing coins.
In the past those events have coincided with periods where the sentiment turned negative on Bitcoin: deep bear markets and peak FOMO where everyone wants to take profit.
This trend isn’t fully confirmed yet. We’ll need two more months of the same to be sure. But the tl;dr is that the mood is pivoting from bullish to bearish on-chain.
When small fish stop accumulating
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